Student loans were introduced in the 1960s to promote higher education among American citizens and ultimately boost the economy of the country. As time passed, industries evolved and changed the country’s economy, making college expensive. People have to pursue higher degrees to increase their chances of getting a job. However, pursuing advanced degrees can be pricey. This dilemma has led many Americans to take student loans.
The introduction of technology and automation of different industries has led to fewer jobs than before. Therefore, graduates are finding it difficult to secure a stable job and have no way to earn enough to pay back their student loan debt. The whole situation has led to the accumulation of around a trillion dollars in student debt, and the student debt crisis has become a burning issue in the US nowadays. People of all genders, ethnicities, religions, socioeconomic statuses, and more are affected by the student debt crisis.
The student debt crisis is an ongoing debate in the US. Various factors need to be carefully analyzed for this debate to reach a meaningful conclusion. In this article, we are going to discuss the crucial aspects to consider in a student debt crisis debate.
1. Cost of Education
Millennials are considered the most educated but poorest generation in history, and most of their debt is due to student loans.College tuition fees have been steadily increasing for a long time. However, higher education costs have skyrocketed in recent years. There are various reasons why college has become so expensive. Some of them include;
Growing demand for a college degree
College degrees are needed to secure a suitable job. They are a requirement for job applications in several industries. Therefore, more and more students choose to pursue a college degree even if it lands them in crippling debt.
Lower funding from the state
Lower or no funding from the state can affect the finances of a college. Therefore, they demand high fees from students to fulfill their financial needs and maintain their standards.
Rising financial aid
The US congress decides the amount of loan that the students will receive. Over the years, as congress raised the amount of financial aid, the colleges raised their fees accordingly.
Administrators are expensive
A higher number of university administrator positions like deans, directors, and more has led to increased tuition fees. Colleges need more money to recruit and pay for competent college administrators. Administrators are recruited to maintain discipline and boost the standard of an institute.
According to the National center for education statistics, college fees have increased by 1200 percent since the 1980s.
2. Impact of the Student Debt Crisis
The student debt crisis affects everyone, including the country’s economy. College graduates often resort to working at a low-skill and low pay job after graduating to start paying for their student debt.
The student debt crisis also reduces the spending power of people. It makes them focus more on paying off their debt, and they don’t have enough money left to spend on shopping, which ultimately affects the economy.
The student debt crisis also stops rising entrepreneurs from expanding their businesses because entrepreneurs owing more than $30,000 in debt are 11% less likely to start their own businesses.
Similarly, the student debt crisis affects the housing market as well. Adjusting for inflation and paying off debt leaves people with little to no money in savings. Therefore, many people are unable to purchase a house.
3. Racial Aspect of the Student Debt Crisis
It has been seen in the results of various surveys that people from Asian, African, or other racial backgrounds are more affected by the student debt crisis. It can have several reasons; some of them include;
- Students from these racial backgrounds either don’t or have limited financial support from their families.
- Students from different racial backgrounds face more difficulties in completing their education. For example, many African Americans drop out in the second or third year of their degree due to financial constraints.
- Moreover, Asian, Hispanic, and African American students don’t have as much wealth as their white counterparts post-graduation. The reason is that those students support their families and uplift their communities along with other necessary expenses and end up saving no money, further increasing the racial wealth gap.
4. Loan Forgiveness
Several people are demanding that the accumulated student debt should be forgiven to help solve the student debt crisis. There are different types of loan forgiveness programs under review these days. For example, a $10,000 broad forgiveness program is for vulnerable people who dropped out for any reason and don’t have the money to pay back their debt. Debaters argue that loan forgiveness has various advantages and disadvantages. Let’s discuss some of them;
The various advantages of loan forgiveness programs are;
- Since student loan debt has significantly affected several racial groups more than others, forgiving them can help promote racial equality.
- Student loan debt forgiveness can help boost the economy.
- Student debt forgiveness will provide Americans with the freedom to enjoy their lives and achieve various milestones like getting married, purchasing a house, and more, creating a healthy and productive society.
The various disadvantages of loan forgiveness programs are;
- Student debt forgiveness is unfair to the loan system, and people should be held accountable for their economic choices.
- Forgiving student loan is a temporary solution, and the focus should be on reducing college fees.
- Student loan forgiveness will be more beneficial for financially secure people than their counterparts, creating a wealth gap.
The Bottom Line
In the past, student loans helped students pursue advanced degrees and secure excellent jobs. However, now the dynamics have changed. College has become expensive, and jobs are scarce. Therefore, graduates of advanced degrees have no jobs and no way to repay the loan. This entire situation has led to the student debt crisis.
The various aspects of a student debt crisis that must be considered during a debate include the cost of education, impacts of a student debt crisis, racial aspects, and the loan forgiveness programs. Hopefully, this article will help you understand the different crucial aspects to consider in a student debt crisis debate.